Texas Series LLC
Have our Texas Series LLC lawyer create yours today
- Protect multiple assets with one LLC
- Ideal for real estate investors
- Protect your personal assets from business debts & liabilities
- We charge a flat fee of $500 (plus the $308.10 filing fee)
Texas Series LLC Overview
A Series LLC is a type of LLC that has the unique ability to create separate and distinct cells (also known as “series”) within a single LLC.
Each series resembles an independent LLC because each series: (1) can do almost anything an LLC can do and (2) insulates the series' assets from the liabilities of the Series LLC and the other series. The Series LLC provides a framework that allows the members of the Series LLC to keep multiple assets/businesses separate while still operating under the umbrella of a single LLC. For this reason, a Series LLC is often used as an alternative to a multiple LLC structure.
The primary benefit of a Series LLC is the ability to silo or segment liabilities by using multiple series while only forming and maintaining a single state-registered entity (the Series LLC).
Advantages of the Texas Series LLC
In addition to the traditional LLC benefits, the advantages of using a Texas Series LLC are: (1) it can protect multiple assets better than a single traditional LLC (as each series insulates the asset it owns from the liabilities of the LLC and the other series), and (2) it is a single entity (LLC) and therefore only requires the filing of one Certificate of Formation with the Texas Secretary of State (and one filing fee), one bank account, one bookkeeping account, etc.
A Series LLC can be used, for example, by a real estate investor who owns multiple properties. Each property would be held by a separate series. If property 1 is owned by series 1 and a tenant in property 1 files a slip and fall lawsuit, the proper defendant would be series 1. If a judgment is rendered in favor of the tenant and remains unpaid, the injured tenant/judgment holder would be able to seize only the assets of series 1 (i.e., property 1). Therefore the remaining assets of the Series LLC and the other series are protected.
Disadvantages of the Texas Series LLC
Formation of a Texas Series LLC
A Texas Series LLC is formed by filing a Certificate of Formation with the Texas Secretary of State and executing a Company Agreement (also known as an Operating Agreement). Both documents must have clauses incorporating a notice of limitations on liabilities (i.e., statutory language about the limited enforceability of obligations).
Maintaining a Texas Series LLCs
Once the Series LLC is properly formed, it must also be adequately maintained. The limited liability afforded by the use of individual series is only in effect “to the extent the records maintained for that particular series account for the assets associated with that series separately from the other assets of the company or any other series.”
Creating Series Within a Texas Series LLC
Considerations for Using a Texas Series LLC
There are potential drawbacks to using a Series LLC. As noted above, a Series LLC can be more complex to maintain than a traditional LLC due to the statutory requirement to keep precise records to account for series assets separately from the company's other assets or any other series. Failure to maintain records properly can result in the loss of the liability barriers provided by each series. In other words, failure to maintain proper records could essentially reduce the enterprise to a traditional LLC. As such, some scenarios dictate the use of traditional LLCs.
It may not be appropriate to use a Series LLC when:
(1) A series will own assets in a state that has not authorized Series LLCs. Not all states have authorized Series LLCs, and those states that have authorized them have differing requirements. Accordingly, using a Texas Series LLC (or a series within the Texas Series LLC) outside of Texas runs a greater risk of being viewed as a single traditional LLC, thus putting its assets at a greater risk.
(2) The owners of one series must differ from the owners of the Series LLC. If you own the Series LLC but wish to acquire multiple properties with different equity investors, we recommend using multiple traditional LLCs.
(3) The liabilities associated with one business or asset do not justify the additional segmentation that comes with a series. If your business is to buy and sell TVs, creating a series for each TV is not sustainable nor typically advisable.
(4) The value of the assets should justify the added costs of using a series. If your businesses are service-based without valuable assets, we typically use a single traditional LLC, perhaps with multiple assumed names, aka DBAs.
(5) The length of time you hold the asset is short. If you are flipping houses, for example, you may want to keep costs down by not creating (and subsequently terminating) a series for each acquisition. Many of our clients who flip real estate will use a traditional LLC for flipping (or a flipping series).
Texas Series LLCs are great for specific scenarios due to their benefits. The unique benefits of the Texas Series LLC predictably outweigh the drawbacks (i.e., the added complexity of this relatively new entity structure), especially when protecting multiple assets like real estate investors often desire.
To learn more about the Series LLC or discuss further, you can contact our Texas Series LLC lawyer anytime via our contact us page.
Zachary Copp, Esq.
Mr. Copp is a graduate of the University of Texas at Austin and the founder of the Copp Law Firm. He has been licensed in Texas for 19 years and has personally formed over 3,000 Texas LLCs since 2015. He was recognized as a Rising Star by SuperLawyers® for seven straight years. See full bio →
How To Hire Us
We utilize secure online questionnaires to streamline the hiring process. No office visit required.
- Submit Series LLC Info. Use the gold button below to submit your request for a new Texas Series LLC securely.
- Receive Your Series LLC. We'll file formation paperwork with the state no later than the following business day after we receive your request and prepare all of the other deliverables while we wait for the state to approve your Series LLC (typically three business days after submission).